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DBS’s Quarterly Profit Increases 15% On Interest, Fee Income
Corporate Digest | 30 July 2015
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DBS Group Holdings, Southeast Asia’s largest bank, posted a 15 percent gain in second-quarter profit as its net interest margin rose to a three-year high and fee income climbed to a record.

Net income advanced to $1,120 million (US$816 million) for the three months ended 30 June from $969 million a year earlier, the Singapore-based bank reported. That compared with the $1,070 million average of nine analysts’ estimates compiled by Bloomberg. The company boosted its dividend payout.

Domestic interest rates close to the highest levels since 2008 have allowed Singaporean lenders to increase charges to borrowers. The banks still face the prospect of weaker loan growth this year as the city’s economy contracts amid an Asia-wide slowdown led by China.

“The above-estimate second-quarter net income boded well for DBS but I’m still concerned about the potential of further slowdown in loan growth, which could offset some of the improvement in net interest margins,” Bernard Aw, a strategist at IG Asia in Singapore, said in an e-mail.

DBS’ net interest margin in the April through June period rose to 1.75 percent, the highest in 13 quarters, from 1.67 percent a year earlier, the bank said. Net interest income climbed 12 percent to $1.7 billion, while fees and commissions grew 16 percent to $582 million.

Higher Dividend

The bank’s shares have risen 3.5 percent this year, the only advance among the three major Singapore banks, following a 20 percent rally in 2014. The benchmark Straits Times Index has lost 0.7 percent since December.

The lender is the first of the three publicly traded Singaporean banks to post quarterly earnings.

DBS declared a first-half dividend of $0.30 per share, up from $0.28 a year ago, as “a reflection of our confidence in the sustainability of our earnings,” chief executive officer Piyush Gupta said in a statement to media.

Loans grew 1 percent in the second quarter from the previous three months in constant-currency terms. When the bank released its first-quarter numbers in April, Gupta forecast loan growth of 5 percent to 6 percent for the year, down from 11 percent in 2014.

More Sheltered

The economic slowdown in Asia combined with a slump in commodities prices have curbed loan demand. Singapore’s gross domestic product fell an annualized 4.6 percent in the three months through June from the previous quarter, the trade ministry said 14 July.

“While Singaporean banks are relatively more sheltered, they also cannot be fully independent from this trend,” Kenneth Ng, an analyst at CIMB Securities in Singapore, said before the earnings report.

DBS’ allowances for bad loans and other losses rose 7 percent to $137 million in the second quarter from a year ago, mostly driven by Greater China excluding Hong Kong, the bank said. Still, the amount was 24 percent lower than the previous quarter.

DBS Group Hldgs  25.030 -0.27 -1.07%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More

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